Interest Rates and the Design of Financial Contracts

We thank Patrick Bolton, Urban Jermann, Craig Leonard, Yueran Ma, Mark Mitchell, Christian Opp, Bill Schwert, Daniel Streitz; seminar participants at the University of British Columbia, the University of Nebraska-Lincoln, the University of Southern California, and the Wharton School; and participants at the Chicago Junior Finance and Macro Conference, the Conference on Financial Frictions at Copenhagen Business School, and the Washington University Corporate Finance Conference for helpful discussions. We also thank Bilge Yilmaz for assistance in acquiring leveraged loan data. We gratefully acknowledge financial support from the Jacobs Levy Equity Management Center, the Rodney L. White Center, and the Wharton Financial Institutions Center. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

• online appendix

• May 19, 2020